The move to prospective payment for health care services in the United States has disrupted much of the established health care system. Current research on Diagnosis RElated Groups (DRGs) deals almost exclusively with acute care settings. Study findings generally conclude that hospital patients are discharged after shorter lengths of stay and in less healthy states. Predictably, changes such as these will have an impact on the community (extra-hospital) health care system. Nonetheless, research in this area is conspicuously absent. The need for examining changes from a community perspective is critical. Early documentation of changes in community service demands and consequent resource consumption will facilitate appropriate adjustments in resource development and allocation. Health service adaptation to new patient populations is crucial to maintaining optimal community health. Public providers, in particular, must attent quickly to service provision responses since they have little or no control over demand. The proposed study will examine public health department post-hospital home health patient characteristics of two groups (Medicare and non-Medicare) during two time periods (one year before DRGs and one year after DRGs). Health departments will be selected based on region, area percent elderly, public health nurse to population ratio, and rurality. Field staff will code data from approximately 3000 health department records. The data will reflect nursing resource consumption as indicated by patient prognosis, quantity of nursing care, intensity of care and outcome. Differences in these indicators will be analyzed between groups and between time periods. Analyses will be controlled for rurality, percent elderly, and public health nurse/population ratio. Regional variation will also be examined. The findings of the proposed study will have significant implications for agency structural and functional changes. For example, staff allocation or service complement may be re-designed based on changes in demand for quantity or intensity of nursing resources. Increases in unsatisfactory outcomes can also signal needed changes. If significant increases in the average resource consumption per visit are documented, it will bring into question the historical cost base which has been used to develop the prospective payment system.